French government faces opposition to tax plan

The French government is facing concerted opposition from Canal Plus to its proposed abolition of a tax break that sees pay-TV service providers pay VAT at the reduced rate of 5.5% rather than the general rate of 19.6%, according to local reports.

According to a report in financial daily Les Echos, Canal Plus is raising the threat that it could break commitments agreed with the government concerning its support for local content production and the French cinema industry, if the latter goes ahead with the plan. The paper reported that Canal Plus president Bertrand Méheut met president Nicolas Sarkozy’s chief of staff Claude Guéant at the Elysée Palace on Tuesday to discuss the issue.

Canal Plus reportedly invests about €550m in French cinema and €500m in sport each year. The proposed increase in the VAT rate, which could potentially have an impact of the pay-TV operator to the tune of €450m, could force Canal Plus to raise its subscription prices to over €40.

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